Work with Your Lender to Avoid Foreclosing
(2 of 5)
Work with Your Lender to Avoid Foreclosing
First, don’t ignore the problem, because it will be harder to reinstate your loan if you fall behind and easier to lose the home.
Things To Know
- As a rule, lenders don’t want your home back.
- Lenders have many options for you to work with.
Call your lender
It pays to contact your lender if you are having trouble making your mortgage payments. If you wait until you’ve missed several payments, the lender may have already initiated the foreclosure process on you. As a rule, lenders don’t want your home—they want your monthly mortgage payments. Holding onto a foreclosed home is a burden for lenders. They must spend time and money getting it back onto the market when they would rather you stayed in it and made payments.
Some options to consider
Lenders have options for you. They might accept partial payments, or they might let you skip a few payments (with the difference to be tacked onto the loan for eventual payment). This is called a forbearance. It will go on your record. The sooner you can make up any money you didn’t pay, the more quickly your loan will be restated to good order.
They might even rework the loan for you. This is called a loan modification. Loan modification might include, for example, converting an adjustable rate to a fixed rate or stretching your loan over a longer period, which reduces your payments but adds additional interest.
Refinancing is also an option. But it is available only if there is sufficient equity in the home.
Beware
A note of caution: you don’t need to contact foreclosure prevention companies or services. Many of them are legitimate, but they will charge you large fees to do what your lender will do for free. Also, scammers prey upon people who are in or near foreclosure, convincing them to sign documents that actually turn the homes over to them.
Consider contacting a HUD-approved housing counselor. HUD is the US Department of Housing and Urban Development. It offers free or low-cost housing counseling, including helping you understand your options under the law and helping you with your negotiations with your lender. You can contact HUD at (800) 569-4287.